Marketing, Media, and Technology Thoughts

Category Archives: Media & Entertainment

A colleague of mine sent me an instant message this morning with a link to an article written over at the Advanced Media Network. I’ve never heard of AMN before, but looks like they have some excellent content around the video game industry of which I look to explore.

Anyway, there is a list put together that I’ll recap – but check out the article to read more in-depth.

Pros

You don’t have to leave your home to do it

Opens the door to more demos

You don’t have to wait in line

Games are always in stock

Open for game buying 24/7

Lower game prices

Physical copies don’t take up extra space

Cons

Slow download speeds

No physical copies

No returns/refunds

You can’t sell your old games

I’ve been the biggest proponent of bandwidth penetrating the video game industry for multiple reasons, some of which are labeled above. Practicality of releasing a 3GB video game to a mainstream audience may be difficult today because gamers will get frustrated with the wait time to download as well, as, some gamers ultimately will get hung/stuck in the middle of the download (it’s inevitable). Also, to be realistic, the majority of the USA doesn’t have extremely fast connections (though that’s changing) but even with a cable modem, a 3GB video game will take some time.

Once connection speeds and infrastructure increase, I don’t see any of the cons above holding back the digital distribution industry. You CAN sell your old games – those services are just a few months away from launching and once digital distribution becomes a reality (for the mainstream), we’ll see a half dozen taking venture money.

Sony’s made a huge leap in this week’s video game console sales as it’s up +187% according to Video Game Chartz (for Japanese market).

Nintendo DS and Wii are leading the pack, but PS3 and PSP are just behind. Most interesting, Sony PS3 has sold almost 2.5 times more units than XBOX 360 in the same period, potentially because of Microsoft’s issues with the warranty.

Note: The chart on the left is for Japan, not the entire world. This is very positive for Sony as they expected Japan to be one of it’s largest sales territories but it got off to a very slow start.

A USA Chart can be found here, and still, PS3 edges out the Xbox 360 for the same time period. Nintendo is leading the pack overall.

What I’m extremely excited about is that the consoles with broadband capabilities are selling extremely well and this opens up extremely lucrative opportunities within the video games market.

You know when something is taking over your life when you do it from random places including the bathroom. Yes, that’s correct. It may sound extremely awkward, but next time you’re in the company restroom, listen closely to those fingers typing on the keypads of mobile phones and blackberries. I’m not the first person to write about this, but I thought about it earlier today and I wanted to bring it to attention.

Why do we have the need to text whilst in the bathroom? I’m sure it’s not about sharing what we’re doing…(although some colleagues of mine [BK] would disagree), but I feel that it’s all about maximizing our time. Time is the most sacred asset that we all have, and when we go to the restroom, some of us would argue that we’re not using time efficiently when we’re just sitting there. Thus, why not have a text message conversation, answer emails, play bejeweled, or catch up on reading.

Back in the day, I used to watch Tim the Toolman Taylor on Home Improvement and he built a bathroom that had a television. We all laughed when we saw that and I’m sure many of us were in awe, but looking back at it, if you were a stock broker or an avid sports fan, watching television whilst you’re in the restroom for 3+ minutes is necessary.

It’s only a matter of time until someone creates the ultimate application for the phone for bathroom usage. Today, I’d consider that text messaging, but not sure what it’ll be tomorrow. Next time you have a conversation with someone over text message, ask them where they are. Seriously.

I’m sure these little tidbits warrant a larger posting (for each of them) but I wanted to get them out into the open as they are/were on my mind:

Is it me or have you been receiving a significant volume of LinkedIn and Facebook invitations lately? Jason Calcannis and Fred Wilson have both posted about this, but I’ve noticed it as well. People from whom I never thought of would join these networks have sent me invites and it’s nice to see folks online. I still am standing strong on my thoughts: I have a lot of “friends”, but “friends” exist on many levels… and no social network that I know of today has this.

Guitar Hero took over my bachelor party. Well, not really, but when we were in the RV, that was the dominate activity. There are only 1 or 2 hardcore gamers in my group of friends, but most of the non-gamers took a huge liking to Guitar Hero and they played it for hours on end. One of my good friends who now lives out in San Francisco labeled it, “The Fun Killer.” The Nintendo Wii and Guitar Hero are doing some interesting things for the games industry.

Fox 11 Los Angeles did a 3 minute clip regarding an emerging game, MapleStory, which focuses on how gamers are in a craze about the game. Some gamers are spending $50/week in virtual items for the game and others are stealing money from their folks credit cards to pay for new goods.

Take a peak at the clip and would love to hear some comments. There is no doubt that the gaming industry is in a state of flux and the lifetime value of a gamer is much higher than the traditional retail price of a video game.

I believe that the winners in the video game industry are going to be the publishers/developers who adapt their models to meet these new opportunities. Which publishers will be able to do so? Which will not?

I’ve reiterated the same comment over the past few years which is that the video game industry is going thru a renaissance that the music industry is currently in. The traditional ways of monetizing your assets are changing and you need to do new things to keep up with gamers. If I played the stock markets more often (unlike other friends and family members), I’d put some skin in the game on publishers who are going to retool their business to account for these new opportunities.

EA and Activision have publicly come out and stated that they want to pursue these new revenue opportunities. Behind the scenes, we know that many others are as well.

I’m going to be devoid of the blogosphere starting today thru Sunday as some of my best friends are taking me out on my bachelor party. I have no idea where I’m going or what I’m doing – but in 30 minutes, they will be arriving to pick me up. Stories & Pics to follow…. have a great weekend!

For the first time this decade, Activision edges out Electronic Arts as the #1 third party game publisher. For those of you who don’t know what a 3rd party publisher is, it’s essentially a publisher who isn’t attached to major game console or platform. According to NPD data, Activision posted $387.8 million in sales from January to June, edging out EA, with $365.7 million during the same period. Activision is reaping the rewards of having several high-profile franchises, including Guitar Hero, Tony Hawk and Call of Duty.

If you’re in the video game industry or watching it closely, you probably want to have Adrian Crook on your radar screen as you probably already subscribe to Raph Koster and Nabeel Hyatt‘s RSS feeds. Adrian is head of Relic Labs (THQ), trying to figure out new ways of developing and monetizing games through different digital ways.

I have had the chance to talk with Adrian offline and he’s extremely passionate about the space and has a lot of great thoughts about the future of gaming, as well, as, loves my favorite sport: hockey.

Adrian has 2 posts that you should read it you’re following the MMO/Casual game development space:

I spent part of my Sunday afternoon reading a presentation given by Paul Heydon, Managing Director of Avista Partners. The purpose of the presentation was a strategic overview of the space for M&A purposes. Being in the industry, I found most of the information redundant, but I did like how he highlighted the following:

Trends in Industry

More developers are switching from high end console to casual games

Game portals/aggregators growing in popularity with consumers; watching less TV; advertising is a major source of revenue

Mix of ad-supported, casual games and paid premium games

In-game advertising is a new source of revenue for developers/publishers

Casual MMO’s will grow (i.e. Runescape)

Business models selling items in game growing quickly (i.e. Bigpoint)

Social 3d chat games will grow (i.e. Second Life, Habbo Hotel)

Micropayments

Opportunities for Casual Games

Acquire or be acquired

Raise money to grow and/or acquire

Build D2C business on own websites with a focus on community

Monetize across other platforms by licensing or in-house for mobile, console, in addition to PC in-store

Sell items in-game

Publish games by episode

Build advertising revenues

Localize sites for key non-english countries

Outsouce seelct development pieces overseas

Develop game widgets for social networks (i.e. Bunchball)

Also, there is one area of the presentation I do like… Paul talks about how World of Warcraft is NOT the holy grail of online games. Reasons for this is that WoW attracts only hardcore gamers and not the mass market. Of WoW’s 8 or 9 million subscribers, that’s a distant second or third compared to the 50 million users worldwide of Maplestory or the 66 million users of Habbo Hotel. He also points out that the lifecycle of most MMORPG’s have a life cycle of less than five years.

Microsoft reported that it has generated about $125M off of virtual asset sales through it’s proprietary Xbox Live platform. This equates almost $18 per user, or 6 transactions of precisely $2.78.

What I find interesting is that the market today is all about the hardcore gamer purchasing virtual goods (currency, characters, etc) through services like IGE, but with the mainstream Xbox Live platform, this expands the horizons and shows that all types of gamers would purchase virtual goods. As Electronic Arts and Activision have publicly alluded to – the future is being exposed, new revenue streams for games are opening up.